10 Tips for Buying Property In Another State
Several motivations could drive you to purchase a property in another state. If you’ve purchased a property before, you know that it’s super convenient to look at a house that’s within easy driving distance.
For example, you may review the structure before making an offer, attend the inspection in person, and sign the closing documents in person. If you’re renting the property to someone else, you can interview the tenant in person and visit the property on a regular basis to see how it’s faring.
How are you supposed to perform these functions if you try to acquire a property on the other side of a state line?
Why Buy in Another State?
There are many good reasons to buy in another state. These are just a few:
- Moving. The simplest motivation is moving. If you get a new job in a state across the country, you may want to purchase a residence there before you’re ready to move.
- Better market conditions. Sometimes, the market in one state will be significantly more favorable than in the state of residence. You can get better homes for lower prices, which would make them attractive to other investors.
- Portfolio diversification. If you want more consistent returns (and a better hedge against risk), it’s a good idea to invest in properties from different areas – including those in other states.
Important Tips for Buying Across State Borders
So how can you get the most out of your out-of-state property purchase?
1. Begin prep work early. If you’re going to make a long-distance move, it’s a good idea to begin your prep work early. The earlier you start, the better. Beginning the process of packing, cleaning, and planning the move several weeks, if not months, in advance will enable you to feel lower stress during the process and give you more time to make complex, vital decisions. It’s especially valuable if you’ve never purchased property out-of-state before.
2. Start small. If you’re going to buy an investment property, you should start small. Focus on locating a simple, single-family home in an inexpensive area. Once you get more experience buying homes in that other state, you can scale up your targets.
3. Work with a property management company. If you’re going to rent the property, make sure you work with a property management company in your target area. A property management company can serve in an advisory capacity: helping you select the right home and guiding you through the purchase. It can also help you handle every aspect of managing the property, from finding tenants to conducting maintenance.
4. Choose the right state. Different states have differing markets, laws, and advantages to property ownership. Make sure you choose the right state for your goals – and don’t forget about subjective factors such as climate, if you’re moving.
5. Do the proper research. Before making a final decision, do appropriate research. Are the real estate laws in your target region significantly different from those in your home state? What has the market been like in this area over the past few years?
6. Visit in person (if you can). It may not be possible to visit your intended home in person before finalizing the purchase, but if you can, try to see it at least once. It’s worthwhile to be present during the home inspection in particular, so you will know exactly what you’re getting into.
7. Be careful with earnest money. In the course of buying a property, typically you’ll submit earnest money as a kind of down payment to prove you’re serious about the potential purchase. But it’s wise to be wary of possible scammers who might try to deceive you out of the money.
8. Get multiple opinions. Before making a final decision, seek multiple opinions. Talk to other investors, landlords, or property investing experts to learn what they think about your investment.
9. Choose your title company carefully. When choosing a title company, lean toward one that has a national presence. That should enable you to manage your title transfer more conveniently. Depending on the circumstances, you might be able to visit a local office in your home state when you complete the paperwork for acquiring your new home.
10. Work with a relocation expert. Finally, if you’re going to be moving across the country, think about hiring a relocation company. They’ll be able to connect you with movers, experts, and other resources you need to ensure the move goes smoothly. It may cost a bit more up front, but it will make your life easier.
Not every property investor will want to purchase property in other states – especially if you’re a traditional investor who likes to view acquisitions in person. But if you ever find yourself in a position to buy an out-of-state home, the above tips can help you get the highest return from your investment.